Former Cabinet Minister Owen Paterson has just made a hard hitting speech on the UK’s relationship with the EU. He made a familiar case that the EU is as much a political union as an economic one. He concluded that the UK should remain in the ‘economic’ Single Market but remove itself from the political union.

A clear position? Well, staying in the Single Market, while removing the political aspects of the EU can mean different things – it could mean remaining in the EU while pairing back the worst aspects of the EU’s state building or leaving altogether and negotiating instead a trade agreement in order to retain access to the Single Market.

There has been some understandable ambiguity in the reporting of Paterson’s position, this is our under-standing:

Times reports it is “reform”

Firstly, Paterson believes the issue should be solved via a referendum in 2017. But his proposed question is not entity straight forward. His preferred options are:

Yes: The UK leaves the EU and joins the EEA, like Norway; orNo: The UK stays in the EU and joins the euro

An interesting choice, that excludes the possibility of better EU terms or even continuing as a non-Euro state. However, it is clear that Paterson’s negotiation is not a ‘re-negotiation’ but a simple negotiation for #Brexit. He favours joining Iceland, Switzerland, Lichtenstein and Norway in EFTA and joining EFTA’s deal with the EU – known as the EEA (of which Switzerland is not part). And in order to conclude his exit terms and EEA membership he seeks to use a provision of the Lisbon Treaty that allows a two year period after notifying the EU of an intention to exit to attempt to finalise continuity terms – Article 50. We’re sceptical of the EEA model as an alternative for the UK outside the EU, at least as currently set out, but let’s leave that one to the side for the moment.

It has been argued previously that Article 50 could be used to trigger a full renegotiation of the terms of the UK’s membership within the EU. However Paterson’s proposal is more straightforward – he wants to immediately start to negotiate Brexit terms in 2015 so that a clear proposition is on the table for the 2017 referendum. That may have the benefit of providing the clarity that has so far been lacking in the ‘out’ case – but has three obvious drawbacks.

What happens if the other EU states do not wish to negotiate prior to a referendum outcome – they cannot be forced to.

What happens if the UK votes to stay in – would the other EU member states be compelled to cancel the exit application? Perhaps but at what price?

Article 50 isn’t a great negotiating tool. We have previously weighed up the pros and cons of using Article 50 below, but what’s clear is that it’s giving away a lot leverage over the UK’s terms of exit (for example, the final deal will be decided by a qualified majority vote of which the UK won’t be part).